## Before the United States Department of Transportation 

# Washington, DC June 12, 2014

Essential Air Service at: KEARNEY, NEBRASK A Docket OST-1996-1715 NORTH PLATTE, NEBRASK A Docket OST-1999-5173 SCOTTSBLUFF, NEBRASK A Docket OST-2003-14535 under 49 U.S.C. 41731 et.seq.
This document contains Great Lakes Aviation, Ltd.'s response to Order Requesting Proposals 2014-4-30. Great Lakes Aviation, Ltd. is pleased to submit this proposal, as an inseparable package, for all three of these Nebraska communities. Our proposals contemplate conveniently timed c onnecting services to our Denver hub, whereby passengers may utilize our code-share agreements with United Airlines and Frontier Airlines. Local service will be marketed and priced utilizing the Great Lakes (ZK) brand and reservations system. Additionally, Great Lakes maintains interline ticketing and baggage agreements with the majority of the other carriers serving Denver, including inter line e-ticketing agreements with American Airlines, Delta Airlines, Frontier Airlines and United Airlines . All of which will offer passengers traveling to and from these communities supplemental a ccess to the domestic and international air transportation system. The proposed service is being offered utilizing pressurized, twin-engine Beech 1900D aircraft flown by two pilots. New FAA pilot qualification rules have created an industry-wide pilot shortage which has had an acute impact on Great Lakes. These new rules mandated that first officers obtain an Airline Transport Pilot certification (“ATP”) prior to being qualified to perform crewmember duties in scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours. On March 18th of this year, Great Lakes received from the FAA new operations specifications allowing us to hire pilots under it's FAR Part 121 Certificate utilizing FAR Part 135 regulatory hiring requirements. This allows our new hire pilots to operate the Beech 1900D aircraft in a nine seat configuration and will enable Great Lakes to restore pilot staffing levels while maintaining FAR Part 121 hiring, training and maintenance standards. Great Lakes' "base case" proposals assume that we will be limited to nine available seats for our Beechcraft 1900D aircraft. As an alternative, we have provided proposals that lower subsidyQuestions and comments may be referred to:

Michael O. Matthews Chief Financial Officer Great Lakes Aviation, Ltd. 1022 Airport Parkway Cheyenne, WY 82001 (307) 432-7000 requirements assuming that the aircraft can be retur ned to a 19 seat configuration. Additionally, for the same annualized subsidy requirements as our "base case" proposal; we are prepared to commit, with the full marketing support of the communities, to upgrading the aircraft to 37 seat or larger regional jets operating two roundtrips per weekday and two roundtrips over the weekend period. It is Great Lakes' belief that regulatory relief for small community air service must be granted in the near future. Excessive subsidy requirements will force communities to loose EAS service eligibility as available seats are being dramatically reduced due to arbitrary limitations on aircraft seating configurations. Great Lakes’ stands ready to participate in creative solutions to assist small communities in their efforts to remain in the National Air Transportation System.Table of Contents:SubsidyPassengers Average Subsidy CostBid Service Point(s) Hub Served Round Trips Equipment RequirementForecast Fare per Passenger1 Scottsbluff, Nebraska Denver 3 1900D - 9 seat$2,443,52310,000$104.98 $244.352 Kearney, Nebraska Denver 3 1900D - 9 seat$2,993,93812,750$119.02 $234.823 North Platte, Nebraska Denver 3 1900D - 9 seat$2,818,16310,000$116.55 $281.82Total Cost of 9 Seat Beech 1900-D$8,255,62432,750$252.081 Scottsbluff, Nebraska Denver 3 19 Seat *Plus*$1,765,84920,000$97.77 $88.292 Kearney, Nebraska Denver 3 19 Seat *Plus*$2,034,86627,000$108.21 $75.373 North Platte, Nebraska Denver 3 19 Seat *Plus*$2,117,11920,000$107.97 $105.86Total Cost of 19 Seat *Plus* Bid$5,917,83467,000$88.33Cost of 1,500 hour ATP to EAS program$2,337,78934,250- $163.75As a alternative to the nine seat aircraft EAS bid, Great Lakes would be prepared to commit toupgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips perweekday and over the weekend period for the same total annualized subsidy amounts.Regional Jet service option to be offered at Great Lakes discretion and assumes full communitymarketing support for the company's efforts to offer a minimum of 74 departing seats per weekday.

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Scottsbluff, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 1,656 Revenue Passenger Miles: 1,500,000 Available Seat Miles: 2,484,000
Operating Revenues: Passenger: BFF-DEN 10,000 psgrs at $104.98 $1,049,800

Other: (at 0.62% of passenger revenue) $6,509 Total Operating Revenues: $1,056,309
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $984,388 Flying Operations $326,629 Maintenance $613,112 Total Direct Expenses: $2,289,839 Total Indirect Expenses: $1,043,334 Total Operating Expenses: $3,333,173 Operating Loss ($2,276,864) Profit Element (5.0% of Total Operating Expenses) $166,659 Annual Compensation Requirement: $2,443,523 All Scottsbluff - Denver - Scottsbluff Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,443,523 Regional Jet Subsidy 1,227 Departures $1,991.46

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Kearney, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,454 Revenue Passenger Miles: 3,660,000 Available Seat Miles: 5,050,800
Operating Revenues: Passenger: EAR-DEN 12,750 psgrs at $119.02 $1,517,505

Other: (at 0.62% of passenger revenue) $9,409 Total Operating Revenues: $1,526,914
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,495,923 Flying Operations $484,027 Maintenance $750,982 Total Direct Expenses: $3,096,642 Total Indirect Expenses: $1,208,931 Total Operating Expenses: $4,305,573 Operating Loss ($2,778,659) Profit Element (5.0% of Total Operating Expenses) $215,279 Annual Compensation Requirement: $2,993,938 All Kearney - Denver - Kearney Service is Non-Sto p This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,993,938 Regional Jet Subsidy 1,227 Departures $2,440.05

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## North Platte, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,024 Revenue Passenger Miles: 2,280,000 Available Seat Miles: 3,775,680
Operating Revenues: Passenger: LBF-DEN 10,000 psgrs at $116.55 $1,165,500

Other: (at 0.62% of passenger revenue) $7,226 Total Operating Revenues: $1,172,726
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,257,454 Flying Operations $399,214 Maintenance $676,691 Total Direct Expenses: $2,699,069 Total Indirect Expenses: $1,101,778 Total Operating Expenses: $3,800,847 Operating Loss ($2,628,121) Profit Element (5.0% of Total Operating Expenses) $190,042 Annual Compensation Requirement: $2,818,163 All North Platte - Denver - North Platte Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,818,163 Regional Jet Subsidy 1,227 Departures $2,296.79

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Scottsbluff, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 1,656 Revenue Passenger Miles: 3,000,000 Available Seat Miles: 5,244,000
Operating Revenues: Passenger: BFF-DEN 20,000 psgrs at $97.77 $1,955,400

Other: (at 0.62% of passenger revenue) $12,123 Total Operating Revenues: $1,967,523
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $984,388 Flying Operations $326,629 Maintenance $613,112 Total Direct Expenses: $2,289,839 Total Indirect Expenses: $1,265,754 Total Operating Expenses: $3,555,593 Operating Loss ($1,588,070) Profit Element (5.0% of Total Operating Expenses) $177,780 Annual Compensation Requirement: $1,765,849 All Scottsbluff - Denver - Scottsbluff Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions.

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Kearney, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,454 Revenue Passenger Miles: 8,235,000 Available Seat Miles: 10,662,800
Operating Revenues: Passenger: EAR-DEN 27,000 psgrs at $108.21 $2,921,670

Other: (at 0.62% of passenger revenue) $18,114 Total Operating Revenues: $2,939,784
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,495,923 Flying Operations $484,027 Maintenance $750,982 Total Direct Expenses: $3,096,642 Total Indirect Expenses: $1,641,121 Total Operating Expenses: $4,737,763 Operating Loss ($1,797,978) Profit Element (5.0% of Total Operating Expenses) $236,888 Annual Compensation Requirement: $2,034,866 All Kearney - Denver - Kearney Service is Non-Sto p This Proposal is submitted with no upline scheduling restrctions

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## North Platte, Nebraska to Denver (DEN) Three Round Trips - B1900 - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,024 Revenue Passenger Miles: 4,560,000 Available Seat Miles: 7,970,880
Operating Revenues: Passenger: LBF-DEN 20,000 psgrs at $107.97 $2,159,400

Other: (at 0.62% of passenger revenue) $13,388 Total Operating Revenues: $2,172,788
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,257,454 Flying Operations $399,214 Maintenance $676,691 Total Direct Expenses: $2,699,069 Total Indirect Expenses: $1,386,557 Total Operating Expenses: $4,085,626 Operating Loss ($1,912,838) Profit Element (5.0% of Total Operating Expenses) $204,281 Annual Compensation Requirement: $2,117,119 All North Platte - Denver - North Platte Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions